Most people dream of an inheritance when times get tough. The procedure to determine whether someone left you money in a will depends on whether the testator is alive or dead. The final will of a living testator is a private document; you view it only if the testator agrees. When the testator dies, the executor of his will notifies all named heirs. You can double-check for yourself by a visit to the probate clerk’s office.
• Realize that the only way to determine if a living person includes you in his will is to ask. A “last will and testament” is only definitively “last” after the person’s demise; he amends or supersedes it as he pleases during his lifetime. It remains a private document, fully revocable, even if filed with the court for safekeeping, a procedure permitted in some jurisdictions. However, the will is only as secret and confidential as the testator wishes it to be. He shows it to those he pleases. Asking doesn’t cost you anything, although it may not endear you to the testator.
• Contact the executor to determine whether you are an heir under a will in probate. Most testaments name an executor to administer the will and steer it through the probate process after the death of the testator. If the testator failed to name an executor, the court appoints one. The executor petitions for probate, collects assets, pays debts and distributes the property according to the will dictates. In performing this role, the executor contacts every named heir. You may find out faster whether you inherited under the will by a telephone call to the executor.
• Visit the probate court to obtain the name and address of the executor if you don’t have it or, alternatively, to review the will for yourself. Most court documents, including probate files, are open to public review. Try first the superior court in the county in which the testator lived. Give the court clerk the name and date of death of the deceased and ask for the probate file. Review the file and locate the will, among the first documents submitted. Note the executor information and check for yourself the list of heirs. If your name appears, contact the executor.
Check Probate Filings
If your deceased friend or relative left a valid will, it’s very likely filed with the probate court in the county in which she lived. Although a will is a private document while the person who makes it is alive, it becomes a public document when she dies and it’s filed with the court. Most wills have to go through a court-supervised process where debts and assets are gathered before inheritances are distributed. A will is among the first documents filed in the probate process. You can call or visit the court clerk’s office to see whether it’s been filed and to get the probate case number. In some states, the court clerk will copy the document and mail it to you for a fee.
When There Is No Will
If your friend or relative dies without a will, she didn’t actually leave you money. You still might inherit from her, however, if you’re among her closest blood relatives. When someone dies without a will, the property passes under the state’s intestacy statutes. Each state’s laws differ, but generally the surviving spouse receives the lion’s share, followed by the decedent’s children. Parents and siblings often come next in line. To figure out whether you might get part of the estate, research the relevant state’s intestacy statute to see where you fall in line.
You might not need to get probate if:
• the estate was held jointly with the person’s surviving spouse or civil partner, for example a joint bank account
• the estate doesn’t include land, property or shares
• the money held in the account is within the banks limits. What this limit is and the policy for accessing it varies depending on the provider.
In the above situations, you just need to contact the bank or building society to let them know that the person has died. They might ask for a copy of the death certificate as proof. The surviving spouse can continue to access that joint account.
Preparing for probate
The first step in applying for probate involves some ‘hunting’ and a little paperwork. Specifically, you need to find the will and make copies of certain documents.
• A codicil: this is a legally binding document that the deceased might have written to make additions or changes to their original will.
• A letter of wishes: this is a document that the deceased might have written to explain certain things in their will, or tell what kind of funeral they want. The letter of wishes is not legally binding.
You might need more than one certified copy of the following documents:
• The will
• Birth certificate
• Death certificate
• The codicil, if there are any
• Marriage or civil partnership certificate, if the person was married
If you’re not applying online, you’ll need to attach copies of these various documents to probate forms, and to access the deceased’s bank accounts, investments or life insurance.
When you fill in the probate forms, you need to put in how much the estate is worth.
To value the estate, you need to:
• Find out the value of any assets: such as property, private pensions, savings, shares, jewellery, or valuable collectibles.
• Find out the value of any gifts: that the person gave away in the seven years before they died. You’ll need to include these in the value of the estate. Certain types of gifts which were given away before the person died might incur Inheritance Tax.
• Find out how much debt they have: if any, such as a mortgage, credit cards or loans. You should include funeral costs as part of the debt if the estate is paying for the funeral. If there is joint debt, you’ll need to work out how much is the deceased’s share of that debt.
• Work out how much the estate is worth: once the debt(s) are paid. You’ll also need to work out if they had any jointly owned assets, such as a bank account or a property. Depending on how it’s owned, you might have to include it in the value of the estate.
Value jointly owned assets
Before you can work out the value of the deceased’s share of a jointly, you’ll have to find out how it was owned. Examples of this type of assets are a car, a house or a piece of land.
They might have owned this asset either as:
• A joint tenant, or
• A tenant in common
Asset owned as ‘joint tenants’
• Both owners have equal rights to the whole asset
• The asset automatically goes to the other joint owner if one of them dies
• The deceased can’t pass on their ownership of the asset in their will
• You have to value the asset and include it when working out the Inheritance Tax.
But there might not be Inheritance Tax to pay on this asset if the value falls within their tax-free allowance.
Joint bank accounts
Joint bank accounts are nearly always held as ‘joint tenants’. So, while ownership of the account usually automatically passes onto to the joint account holder, you do need to value it as part of the deceased’s estate. To value the deceased’s share of a joint bank account, you need to find out the balance in the account and divide it by the number of account holders. HMRC usually scrutinizes joint accounts held by unmarried couples or other combinations (e.g. parent and child) more closely. This because the normal exemptions from Inheritance Tax might not apply, and that the surviving joint holder could be liable for a certain amount of tax.
Asset owned as ‘tenants in common’
• Each owner can own a different share of the asset
• The asset doesn’t automatically go to the other owner if one of them dies
• The deceased can pass on their ownership of the asset in their will
• You have to value the deceased’s share of the asset and include it when working out the Inheritance Tax. But there might not be Inheritance Tax to pay on this asset if the value falls within their tax-free allowance.
If the deceased owned other assets, such as shares, you’ll need to contact the company:
• To find out how it was owned
• Work out how much the deceased’s share of the asset was, and include that as part of the estate.
For property or land, if you can’t find this information in their papers and records, you can get it for a fee, from
• Land Registry for properties in England and Wales
• Department of Finance and Personnel for properties in Northern Ireland
• Registers of Scotland for properties in Scotland
Working out Inheritance Tax
Once you’ve got the value of the estate and how much debt the deceased had, you need to work out the Inheritance Tax due This tax is due within six months from when the person died. And interest is charged if it’s not paid within six months. So to help avoid paying this interest, consider paying some or all of the Inheritance Tax before you finish valuing the estate. If you’re paying this from your own account, you can claim it back from the estate.
Applying for probate or confirmation
Once you’ve valued the estate, you’ll need to fill in a few forms and send it to the nearest Probate Registry office. You’ll also need to pay an application fee, and some or all the Inheritance Tax (if any) to HMRC. How much you need to pay and what forms you need to fill in depends on where you live.
You don’t usually need to apply for probate if the estate was either:
• Jointly owned and so passes to the surviving spouse
• Didn’t include land, property or shares.
If you’re applying online, you will not need to download the forms, but you will need to send in the original will. The address to send this too varies depending on where you live and you will be given the correct address once you have completed your online application. The payment is also made once you’ve submitted your application online. You no longer need to swear an oath, but you will have to sign a statement of truth to confirm the contents of the probate application are true. This can also be done online if you’re submitting an online application.
A last will and testament details how you want your estate handled after you die. If you’re writing a will, you’ll name an executor to handle your affairs after you die. The will instructs the executor on how to divide your assets among your heirs.
But if you’ve been left money in a will, there are a few steps to take to get that money.
• Talk to the executor: If you’re not the executor of the estate, find out who is and talk to them.
• Figure out if you need a lawyer: The next step is when the will goes through probate. This is when the court system reviews the will, authenticating the document, and follows the wishes of the deceased.
• Find out if your cash is taxed: After any debt is handled by the estate, you’ll receive your inheritance. Although you won’t get taxed on the inheritance itself, the federal government does tax you on the earnings from that inheritance. For example, if you receive cash that sits in a savings account and accrues interest, you’re taxed on that interest. While your allotment might not be taxed, what you do with it could be. Make sure you know how your money is handled once you get it.
• Use the money to pay off debt: Getting an inheritance can be a huge financial help if you’re in a money hole. Even if it’s minimal, think about using your new cash to pay off debt faster, including student loans or high-interest credit cards. If you’re behind on your bills, you can also use this new cash to get up-to-date. If you’re making minimum payments on your loans, consider making an extra student loan payment. This can make a big dent in your overall debt.
• Invest and save: Another great way to handle an influx of cash is to put it away so you’re not inclined to spend it. If you don’t already have a retirement account, think about setting one up. Even if you don’t have the means to contribute to it regularly, putting in a sizable amount can help set you up for retirement. Your future self will thank you. If you prefer to control exactly where your money goes and what risk you’ll take, you can also consider investing the money yourself.
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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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